Govt winds up Rs 1,000cr corpus meant for scholarships

New Delhi: The government on Thursday decided to
wind up the Rs 1,000-crore corpus parked with the State Bank
for the national scholarship scheme and replace it with
budgetary provisions.

The decision was taken at a meeting of the Cabinet
Committee on Economic Affairs today evening. "The CCEA
approved modification in the National Means-cum-Merit
Scholarship Scheme so as to wind up the corpus of Rs 1,000
crore with State Bank of India," an official release said.

The annual provision will be made in the budget towards
the scholarship amount and the reimbursement of the cost of
conducting the selection tests as well as other administrative
costs, it added.

The decision to wind up the corpus was taken after SBI
intimated that interest rates on fixed deposits on Rs 1 crore
and above would be 5 per cent per annum as against 9.5 per
cent for the fund when was created in December 2008.

"On finding that the interest earned on corpus fund will
be insufficient to meet the requirement of funds to disburse
scholarships and administrative expenses of the scheme, it was
decided that the corpus be wound up altogether," the release
informed.

The budgetary provision for the required amount on
annual basis will be made to fund the scholarships and related
expenditure, like other Plan schemes, it added.

In 2007 the government had announced a National
Means-cum-Merit Scholarship Scheme to award 1,00,000
scholarships annually, under which each student would be
given Rs 6,000 per annum for studying IX to XII classes and
the scheme was launched in 2008-09.

The government had also announced that an initial corpus
fund of Rs 750 crore would be created in the State Bank, the
yield of which is to be utilised to disburse the scholarships.

The Rs 750 crore was to be added every year to the
corpus for the next three financial years raising it to Rs
3,000 crore. Accordingly, a corpus fund of Rs 750 crore was
created with SBI in 2008-09. However, in 2009-10, only Rs 250
crore was added to the corpus fund raising it to Rs 1,000
crore.